Correlation Between Enservco and Chipotle Mexican

Can any of the company-specific risk be diversified away by investing in both Enservco and Chipotle Mexican at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Enservco and Chipotle Mexican into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enservco Co and Chipotle Mexican Grill, you can compare the effects of market volatilities on Enservco and Chipotle Mexican and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Enservco with a short position of Chipotle Mexican. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enservco and Chipotle Mexican.

Diversification Opportunities for Enservco and Chipotle Mexican

0.23

Correlation Coefficient

Enservco  Chipotle Mexican

Modest diversification

The 3 months correlation between Enservco and Chipotle is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Enservco Co and Chipotle Mexican Grill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipotle Mexican Grill and Enservco is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Enservco Co are associated (or correlated) with Chipotle Mexican. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipotle Mexican Grill has no effect on the direction of Enservco i.e., Enservco and Chipotle Mexican go up and down completely randomly.

Pair Corralation between Enservco and Chipotle Mexican

Given the investment horizon of 90 days Enservco Co is expected to generate 5.79 times more return on investment than Chipotle Mexican. However, Enservco is 5.79 times more volatile than Chipotle Mexican Grill. It trades about 0.06 of its potential returns per unit of risk. Chipotle Mexican Grill is currently generating about 0.25 per unit of risk. If you would invest  23.00  in Enservco Co on February 17, 2024 and sell it today you would earn a total of  3.10  from holding Enservco Co or generate 13.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Enservco Co  vs.  Chipotle Mexican Grill

Enservco

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enservco Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Enservco showed solid returns over the last few months and may actually be approaching a breakup point.

Chipotle Mexican Grill

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chipotle Mexican Grill are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Chipotle Mexican reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enservco and Chipotle Mexican

The main advantage of trading using opposite Enservco and Chipotle Mexican positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enservco position performs unexpectedly, Chipotle Mexican can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chipotle Mexican will offset losses from the drop in Chipotle Mexican's long position.

The idea behind Enservco Co and Chipotle Mexican Grill pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..